Mentor Graphics sees weak Fiscal Q1 sales

Mentor Graphics Corp. expects to post a loss in the current quarter and sees revenue dropping 11 percent from the year-ago period and well below analysts' consensus estimate as the company enters its traditionally weakest financial season.

The Oregon-based company projects a net loss of 15 cents a share for the fiscal 2009 first quarter ending in April and said revenue for the three-month period would be approximately $170 million.

In the year-ago comparable first quarter, Mentor Graphics reported net income of $290,000 on revenue of $190.5 million.

Mentor Graphics' fiscal first quarter sales have always declined sharply on a sequential basis although the projected decline for the current quarter surprised analysts following especially on the heels of a strong fourth quarter.

For the fiscal fourth quarter ended January 31, Mentor Graphics reported net income increased more than 15 percent to $35.7 million, or 39 cents per share, from $31 million, or 36 cents a share in the year-ago quarter. Revenue climbed 17 percent to $201 million from $171.6 million.

The company said results in the just-ended quarter were positively impacted by strength in the automotive and semiconductor manufacturing sectors where orders rose strongly.

Despite the weak fiscal first quarter outlook, Mentor Graphics said it expects to outgrow the market in the 2009 fiscal year and said it is taken steps to curb costs and improve its competitive position.

Mentor Graphics is forecasting fiscal 2009 revenue would grow 4 percent to approximately $915million and expects to post earnings per share of between $1.05 and $1.10 on a generally accepted accounting principle basis.

"The company executed well in fiscal 2008, and we are positioned to outperform the market in fiscal 2009," said Gregory K. Hinckley, president of Mentor Graphics in a statement.

"We have tightened our focus on cost controls, and have taken a number of actions, including shuttering our IP division, to provide a more competitive cost-basis going forward," he added.